Technical Market Report For Saturday, May 29

Technical Market Report for May 29, 2021

The good news is that new lows contracted last week, and the secondaries outperformed the blue chips. 

The Negatives

New highs are an indication of the breadth, and at the rate they are going, new highs are unlikely to confirm any new index highs in the near future.

The first chart covers the past six months, showing the Nasdaq composite (OTC) in blue and a 10% trend (19-day EMA) of Nasdaq new highs (OTC NH) in green. Dashed vertical lines have been drawn on the first trading day of each month. The OTC NH is not confirming rising prices.

The next chart is similar to the first one, except it shows the SPX in red and the NY NH in green. The information has been calculated with NYSE data. Similar action is seen in this chart when compared to the previous one.

The Positives

The number of new lows continues to decline. The next chart covers the past six months, showing the OTC in blue and a 10% trend (19 day-EMA) of Nasdaq new lows (OTC NL) in brown. The OTC NL has been plotted on an inverted Y axis, so decreasing numbers of new lows move the indicator upward (up is good). The OTC NL continued its recovery. 

The next chart is similar to the previous one, except it shows the SPX in red and the NY NL in blue. The information has been calculated with NYSE data. The NY NL is recovering sluggishly, but it is at least recovering. The level of the indicator is not threatening.

The next chart covers the past six months, showing the OTC in blue and a 40% trend (four-day EMA) of Nasdaq new highs divided by new highs + new lows (OTC HL Ratio) in red. Dashed horizontal lines have been drawn at 10% levels for the indicator; the line is solid at the 50%, neutral level. The OTC HL Ratio recovered to a comfortably positive 80% last week.

The next chart is similar to the one above, except it shows the SPX in red and the NY HL ratio in blue. The information has been calculated with NYSE data. The NY HL Ratio rose to a very strong 90%. 

Seasonality

Next week includes the first five trading days of June during the first year of the Presidential Cycle. The tables below show the daily change on a percentage basis for that period. 

OTC data covers the period from 1963 to 2020, while SPX data runs from 1928 to 2020. There are summaries for both the first year of the Presidential Cycle and all years combined. Average returns for the coming week have been positive by all measures.

The number following the year represents its position in the Presidential Cycle. The number following the daily return represents the day of the week:

  • 1 = Monday, 2 = Tuesday, etc.

OTC Presidential Year 1 (PY1)

   Year              Day1      Day2      Day3      Day4      Totals

 1965-1       0.40% 2  -1.17% 3  -0.50% 4  -0.38% 5    -1.66%

 1969-1       0.28% 1  -0.49% 2  -0.15% 3  -0.52% 4    -0.88%

 1973-1      -0.33% 5  -1.50% 1   0.93% 2  -0.01% 3    -0.90%

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